During a period of rapid appreciation in the Canadian real estate market, many of your clients, who typically have a balanced risk profile, began requesting to significantly increase their exposure to real estate investment trusts (REITs) or direct property investments. Their rationale often cited 'everyone else is doing it' and concerns about 'missing out' on easy gains. This collective shift in client preference is most indicative of which behavioural bias?

Question: During a period of rapid appreciation in the Canadian real estate market, many of your clients, who typically have a balanced risk profile, began requesting to significantly increase their exposure to real estate investment trusts (REITs) or direct property investments. Their rationale often cited 'everyone else is doing it' and concerns about 'missing out' on easy gains. This collective shift in client preference is most indicative of which behavioural bias?

Answer options:

• Self-Attribution Bias
• Familiarity Bias ✅ Herding
• Confirmation Bias

Correct answer: Herding

Explanation: Herding occurs when individuals disregard their own analysis and simply follow the actions of a larger group. In this scenario, clients are influenced by the perceived actions and successes of 'everyone else' in the real estate market.